Course Strategic Outline

1. Building a strategic framework to analyze supply chains

2. Designing a supply chain networks
3. Planning and coordinating demand and supply in
supply chain
4. Planning and managing inventories in a supply chain
5. Designing and planning transportation networks

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 1
Understanding the
Supply Chain

PowerPoint presentation to accompany

Chopra and Meindl Supply Chain Management, 5e
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1-2
 Learning Objectives
1. Discuss the goal of a supply chain and explain
the impact of supply chain decisions on the
success of a firm.
2. Identify the three key supply chain decision
phases and explain the significance of each
one.
3. Describe the cycle and push/pull views of a
supply chain.
4. Classify the supply chain macro processes in a
firm.

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 What is a Supply Chain? (1/3)
• All stages involved, directly or indirectly, in
fulfilling a customer request
• Includes manufacturers, suppliers, transporters,
warehouses, retailers, and customers
• Within each company, the supply chain includes
all functions involved in fulfilling a customer
request (product development, marketing, operations,
distribution, finance, customer service)

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 What is a Supply Chain? (2/3)
• Customer is an integral part of the supply
chain
• Includes movement of products from suppliers to
manufacturers to distributors and information,
funds, and products in both directions
• May be more accurate to use the term “supply
network” or “supply web”
• Typical supply chain stages: customers,
retailers, distributors, manufacturers, suppliers
• All stages may not be present in all supply
chains (e.g., no retailer or distributor for Dell)

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 What is a Supply Chain? (3/3)

Figure 1-1 Stages of a detergent supply chain

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 Flows in a Supply Chain

Figure 1-2 Supply chain stages

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 The Objective of a Supply Chain
(1/2)
• Maximize overall value created
Supply Chain Surplus
= Customer Value – Supply Chain Cost
• Success should be measured by total
supply chain profitability, not profits at
an individual stage

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 The Objective of a Supply Chain
(2/2)
• Customer the only source of revenue
• Sources of cost include, flows of
information, products, or funds between
stages of the supply chain
• Effective supply chain management is the
management of flows between and
among the supply chain stages to
maximize total supply chain surplus

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 Decision Phases of a Supply Chain

• Supply chain strategy or design

– How to structure the supply chain over the
next several years
• Supply chain planning
– Decisions over the next quarter or year
• Supply chain operation
– Daily or weekly operational decisions

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 Supply Chain Strategy or Design
• Decisions about the structure of the supply chain
and what processes each stage will perform
• Strategic supply chain decisions
– Locations and capacities of facilities
– Products to be made or stored at various locations
– Modes of transportation
– Information systems
• Supply chain design must support strategic
objectives
• Supply chain design decisions are long-term and
expensive to reverse – must take into account
market uncertainty
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 Supply Chain Planning (1/2)
• Definition of a set of policies that govern
short-term operations
• Fixed by the supply configuration from
previous phase
• Starts with a forecast of demand in the
coming year

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 Supply Chain Planning (2/2)
• Planning decisions:
– Which markets will be supplied from which locations
– Planned buildup of inventories
– Subcontracting, backup locations
– Inventory policies
– Timing and size of market promotions
• Must consider in planning decisions demand
uncertainty, exchange rates, competition over
the time horizon

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 Supply Chain Operation
• Time horizon is weekly or daily
• Decisions regarding individual customer orders
• Supply chain configuration is fixed and operating
policies are determined
• Goal is to implement the operating policies as
effectively as possible
• Allocate orders to inventory or production, set
order due dates, generate pick lists at a
warehouse, allocate an order to a particular
shipment, set delivery schedules, place
replenishment orders
• Much less uncertainty (short time horizon)
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 Process View of a Supply Chain
• Cycle View: processes in a supply chain are
divided into a series of cycles, each performed
at the interfaces between two successive supply
chain stages
• Push/Pull View: processes in a supply chain are
divided into two categories depending on
whether they are executed in response to a
customer order (pull) or in anticipation of a
customer order (push)

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 Cycle View
of Supply
Chain
Processes

Figure 1-3

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 Push/Pull View of Supply Chains

Figure 1-5

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 Push/Pull View of
Supply Chain Processes
• Supply chain processes fall into one of two
categories depending on the timing of their
execution relative to customer demand
• Pull: execution is initiated in response to a
customer order (reactive)
• Push: execution is initiated in anticipation of
customer orders (speculative)
• Push/pull boundary separates push processes
from pull processes

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 Push/Pull View of
Supply Chain Processes
• Useful in considering strategic decisions relating
to supply chain design – more global view of
how supply chain processes relate to customer
orders
• The relative proportion of push and pull
processes can have an impact on supply chain
performance

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 Push/Pull View – Dell

Figure 1-7

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 Supply Chain Macro Processes

• Supply chain processes discussed in the

two views can be classified into
– Customer Relationship Management (CRM)
– Internal Supply Chain Management (ISCM)
– Supplier Relationship Management (SRM)
• Integration among the above three macro
processes is critical for effective and
successful supply chain management

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 Supply Chain Macro Processes

Figure 1-8

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 Examples of Supply Chains –
Reading assignment
• Gateway and Apple
• Zara
• W.W. Grainger and McMaster-Carr
• Toyota
• Amazon

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